CHAPTER 156C LIMITED LIABILITY COMPANY ACT

CHAPTER 156C LIMITED LIABILITY COMPANY ACT

This chapter may be cited as the Massachusetts Limited Liability Company Act.

As used in this chapter, the following words shall unless the context clearly otherwise requires have the following meanings:‑‑

(1) "Bankruptcy", the occurrence of any of the following events:

(a) a member:

(1) makes an assignment for the benefit of creditors;

(2) files a voluntary petition in bankruptcy;

(3) is adjudged a bankrupt or insolvent, or has entered against him an order for relief, in any bankruptcy or insolvency proceeding;

(4) files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation;

(5) files an answer or other pleading, admitting or failing to contest the material allegations of a petition filed against him in any proceeding of this nature;

(6) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the member or of all or any substantial part of his properties; or

(b) one hundred and twenty days after the commencement of any proceeding against the member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within ninety days after the appointment without his consent or acquiescence of a trustee, receiver or liquidator of the member or of all or any substantial part of his properties, the appointment is not vacated or stayed, or within ninety days after the expiration of any such stay, the appointment is not vacated.

(2) "Certificate of organization", the certificate referred to in section twelve, and the certificate as amended.

(3) "Contribution", any cash, property, services rendered or a promissory note or other obligation to contribute cash or property or to perform services, which a person contributes to a limited liability company in his capacity as a member.

(4) "Foreign limited liability company", a limited liability company formed under the laws of any state other than the commonwealth or under the laws of any foreign country or other foreign jurisdiction and denominated as such under the laws of such state or foreign country or other foreign jurisdiction.

(5) "Limited liability company" and "domestic limited liability company", an unincorporated organization formed under this chapter and having one or more members.

(6) "Limited liability company interest", a member's share of the profits and losses of a limited liability company and the member's right to receive distributions of the limited liability company's assets.

(7) "Manager", a person who is designated as a manager of a limited liability company pursuant to the operating agreement.

(8) "Member", a person who has been admitted to a limited liability company as a member as provided in section twenty or, in the case of a foreign limited liability company, in accordance with the laws of the state or foreign country or other foreign jurisdiction under which the foreign limited liability company is organized, and whose membership has not been terminated pursuant to the operating agreement or the operation of law.

(9) "Operating agreement", any written or oral agreement of the members as to the affairs of a limited liability company and the conduct of its business.

(10) "Person", a natural person, partnership, whether general or limited and whether domestic or foreign, limited liability company, foreign limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity.

(11) "State", the District of Columbia or the Commonwealth of Puerto Rico or any state, territory, possession, or other jurisdiction of the United States other than the commonwealth.

§3 Name of limited liability company

The name of each limited liability company as set forth in its certificate of organization:

(1) shall contain the words "limited liability company", "limited company", or the abbreviation "L.L.C.", "L.C.", "LLC" or "LC";

(2) may contain the name of a member or manager; and

(3) may not be the same as, or deceptively similar to the name of any corporation, limited partnership or limited liability company reserved or organized under the laws of the commonwealth or licensed or registered as a foreign corporation, foreign limited partnership or foreign limited liability company in the commonwealth, except with the written consent of said corporation, limited partnership or limited liability company previously filed with the state secretary.

§4 Reservation of exclusive right to name

(a) The exclusive right to the use of a name may be reserved by:

(1) any person intending to organize a limited liability company under this chapter and to adopt such name;

(2) any domestic limited liability company or any foreign limited liability company registered in the commonwealth which, in either case, intends to adopt such name;

(3) any foreign limited liability company intending to register in the commonwealth and adopt such name; and

(4) any person intending to organize a foreign limited liability company and intending to have it register in the commonwealth and adopt such name.

(b) The reservation of a specified name shall be made by filing with the state secretary, an application, executed by the applicant, specifying the name to be reserved and the name and address of the applicant. If the state secretary finds that the name is available for use by a domestic or foreign limited liability company, he shall reserve the name for the exclusive use of the applicant for a period of 60 days. The state secretary may extend the reservation for an additional 60 days upon written request of the applicant. The right to the exclusive use of a reserved name may be transferred to any other person by filing in the office of the state secretary a notice of the transfer, executed by the applicant for whom the name was reserved, specifying the name to be transferred and the name and address of the transferee.

§5 Office and agent for service of process in commonwealth

Each limited liability company shall have and maintain in the commonwealth:

(1) an office, which may but need not be a place of its business in the commonwealth at which shall be kept the records required by section nine to be maintained; and

(2) a resident agent for service of process on the limited liability company, which agent must be an individual resident of the commonwealth, a domestic corporation, or a foreign corporation authorized to do business in the commonwealth.

(a) A limited liability company may change its resident agent or the street address of the resident agent by filing a certificate of change of agent or address with the state secretary. The statement shall contain the following information:

(1) the name of the limited liability company;

(2) the name and street address of its current resident agent;

(3) if the current resident agent is to be changed, the name and street address of the new resident agent and the new agent's written consent, either on the statement or attached to it, to the appointment; and

(4) if the street address of the business office of the resident agent is to be changed, the new street address of the business office of the resident agent.

(b) If a resident agent changes the street address of his business office, he may change the street address of the business office of any limited liability company for which he is resident agent by notifying the limited liability company in writing of the change and signing, either manually or by facsimile, and delivering to the state secretary for filing a statement of change that complies with the requirements of subsection (a) and recites that the limited liability company has been notified of the change. If the street address of more than 1 limited liability company is being changed at the same time, there may be included in a single certificate the names of all limited liability companies the street addresses of the business offices of which are being changed.

(c) Any resident agent may resign his agency appointment by signing and delivering to the state secretary a certificate of resignation. The resident agent shall furnish a copy of such statement to the limited liability company. The agency appointment shall be terminated on the thirty-first day following the date on which the statement was filed.

(a) Except as otherwise expressly provided by law, a limited liability company may carry on any lawful business, trade, profession, purpose or activity.

(b) A limited liability company shall possess and may exercise all the powers and privileges granted by this chapter or by any other law or by the operating agreement, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business, trade, profession, purposes or activities of the limited liability company.

(c) A limited liability company or foreign limited liability company which is organized to render a professional service as defined in section two of chapter one hundred and fifty‑six A shall (i) indicate in its certificate of organization or application for registration the specific professional services which it shall render, (ii) be subject to any conditions or limitations established by any applicable regulating boards as defined in said section two, including the provision of liability insurance required by section sixty‑five, and (iii) include with its certificate of organization or application for registration a certificate by the applicable regulating board which indicates compliance as of the date of organization or registration by the members and managers with any eligibility standards established by such regulating board.

Except as provided in a written operating agreement, a member or manager may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more specific obligations of, provide collateral for, and transact other business with a limited liability company and, subject to other applicable law, has the same rights and obligations with respect to any such matter as a person who is not a member or manager.

(a) Subject to such standards and restrictions, if any, as are set forth in its certificate of organization or a written operating agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Such indemnification may include payment by the limited liability company of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under this section which undertaking may be accepted without reference to the financial ability of such person to make repayment. Any such indemnification may be provided although the person to be indemnified is no longer a member or manager.

No indemnification shall be provided for any person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the limited liability company.

(b) The certificate of organization or a written operating agreement may eliminate or limit the personal liability of a manager for breach of any duty to the limited liability company.

(a) Each limited liability company shall keep at the office referred to in clause (1) of section five the following:

(1) a current list of the full name and last known address of each member and manager;

(2) a copy of the certificate of organization and all certificates of amendment thereto, together with executed copies of any powers of attorney pursuant to which any certificate has been executed;

(3) copies of the limited liability company's federal, state, and local income tax returns and reports, if any, for the three most recent years;

(4) copies of any then effective written operating agreements and of any financial statements of the limited liability company for the three most recent years; and

(5) unless contained in a written operating agreement, a writing setting out:

(i) the amount of cash and a description and statement of the agreed value of the other property or services contributed by each member and which each member has agreed to contribute;

(ii) the times at which or events on the happening of which any additional contributions agreed to be made by each member are to be made;

(iii) any right of a member to receive, or of a manager to make, distributions to a member; and

(iv) any events upon the happening of which the limited liability company is to be dissolved and its affairs wound up.

(b) Records kept under this section shall be subject to inspection and copying at the reasonable request and at the expense of any member or manager during ordinary business hours.

(c) The current list of names and addresses of the members shall be made available to the state secretary within five business days of receipt of a written request by said state secretary or by the director of the securities division of the state secretary's office stating that such information is required in connection with an investigatory or enforcement proceeding.

§10 Furnishing of documents and information to members and managers

Each member or manager of a limited liability company has the right, subject to such reasonable standards, including standards governing what information and documents are to be furnished at what time and location and at whose expense, as may be set forth in the operating agreement or otherwise established by the manager or, if there is no manager, then by the members, to obtain from the limited liability company from time to time upon reasonable demand in writing for any purpose reasonably related to the member’s or manager's interest as a member or manager of the limited liability company (i) true and full information regarding the state of the business and financial condition of the limited liability company, (ii) promptly after becoming available, a copy of the limited liability company's federal, state and local income tax returns for each year, and (iii) other information regarding the affairs of the limited liability company as is just and reasonable.

A member or manager of a limited liability company shall be fully protected in relying in good faith upon the provisions of a written operating agreement and the records of the limited liability company and upon such information, opinions, reports or statements presented to the limited liability company by any of its other managers, members, officers, employees, or committees or by any other person, as to matters the member or manager reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the limited liability company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the limited liability company or any other facts pertinent to the existence and amount of assets from which distributions to members might properly be paid.

(a) In order to form a limited liability company, one or more authorized persons must execute a certificate of organization. The certificate of organization shall be filed in the office of the state secretary and set forth:

(1) the name of the limited liability company;

(2) the address of the office in the commonwealth required to be maintained by section five;

(3) the name and address of the resident agent for service of process required to be maintained by section 5; provided, however, that the agent's written consent to the appointment shall be either in the certificate or attached to it;

(4) if the limited liability company is to have a specific date of dissolution, the latest date on which the limited liability company is to dissolve;

(5) if the limited liability company has managers at the time of its formation, the name and address of each manager;

(6) the name of any other person in addition to any manager who is authorized to execute any documents to be filed with the office of the state secretary and at least one such person shall be named if there are no managers;

(7) the general character of the limited liability company's business;

(8) if desired, the names of one or more persons authorized to execute, acknowledge, deliver and record any recordable instrument purporting to affect an interest in real property, whether to be recorded with a registry of deeds or a district office of the land court; and

(9) any other matters the authorized persons determine to be included therein.

(b) A limited liability company is formed at the time of the filing of the initial certificate of organization in the office of the state secretary or at any later date specified in the certificate of organization if, in either case, there has been substantial compliance with the requirements of this section. A limited liability company formed under this chapter shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company's certificate of organization.

(c) All limited liability companies formed under this chapter shall also file an annual report with the state secretary setting forth the information required in subsection (a).

(d) The fee for the filing of the certificate of organization required by subsection (a) shall be five hundred dollars. The fee for the filing of the annual report required by subsection (c) shall be five hundred dollars. Such fees shall be paid to the state secretary at the time the certificate of organization or the annual report is filed.